Panama City, Dec 24 - A consortium made up of Spanish construction firm FCC, Mexico's ICA and Costa Rica's Meco has won a Panama Canal dry-excavation contract with a $267.8 million bid.

The consortium beat out Belgium's Jan de Nul, Brazil's Oderbrecht and the ISC Panama consortium to win the contract, the second most lucrative of the $5.25 billion canal expansion plan.

According to the specifications laid out by the Panama Canal Authority at the start of the bidding process, the project involves excavating a new channel that will link a new set of locks - yet to be constructed - with the Gaillard Cut, the canal's narrowest stretch.

The winning consortium offered to carry out the dry-excavation work for a total cost of $267,798,795, well below the $294,913,000 offered by ISC Panama, which finished runner-up.

This was the last bidding process of the canal expansion plan and will involve the excavation and removal of some 27 million cubic metres of material.

The work will involve opening a 6.1 km access channel as well as the construction of a large earth and rock dam with a watertight clay core.

PCA administrator Alberto Aleman Zubieta told EFE Tuesday that the idea is for this latest dry-excavation project to be completed by 2013. The entire canal expansion is due to be finished in 2014.

In July, a consortium led by Spain's Sacyr Vallehermoso construction company won a $3 billion contract for the third set of locks for the Panama Canal.

The canal, designed in 1904 for ships with a 267-metre length and 28-metre beam, is too small to handle the "post-Panama" ships that are three times as big, making it necessary to expand by building the new set of locks.

The Panama Canal Authority, a government agency that manages the waterway, wants to double transit capacity.

The 80-km canal, which currently handles about five percent of world trade, has been under Panamanian management since Dec 31, 1999, when the US surrendered it in keeping with the 1977 Torrijos-Carter treaties. (IANS)